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SMM Morning Comments (Jul 28): Shanghai Base Metals Mostly Went down Awaiting Fed Meeting Results
Jul 28,2021 10:00CST
SMM Comments
Source:SMM
Shanghai base metals basically dropped after opening on Wednesday morning as the market was waiting for the Fed meeting results, and the COVID-19 variants intensified market concerns. Meanwhile, their counterparts on LME mostly rose.

SHANGHAI, Jul 28 (SMM) — Shanghai base metals basically dropped after opening on Wednesday morning as the market was waiting for the Fed meeting results, and the COVID-19 variants intensified market concerns. Meanwhile, their counterparts on LME mostly rose.

LME metals all declined on Tuesday. Copper shed 0.66%, aluminium slid 0.78%, lead fell 1.33%, and zinc decreased 1.3%.

SHFE metals performed similarly last night. Copper rose 0.11%, aluminium fell 1.22%, lead dropped 0.41%, zinc lost 1%, and tin decreased 1.86%.

Copper: Three-month LME copper lost 0.66% to close at $9,790/mt on Tuesday, and is expected to trade between $9,780-9,860/mt today.

The most-traded SHFE 2109 copper contract advanced 0.11% to close at 72,090 yuan/mt last night, and is expected to trade between 71,900-72,500 yuan/mt today, with spot premiums between 200-340 yuan/mt.

On the macro front, US durable goods orders increased by 0.8% month on month in June, far lower than the market expectations of 2.1%. Long positions kept increasing amid high market sentiments, boosting copper prices to break through the volatile range. The increase in copper prices slowed down yesterday, as investors held a cautious stance awaiting the results of Fed meeting, looking for more guidance on monetary policy. The hedged positions were stuck in recent days, and the holders wanted to hold high premiums. Buyers did not accept the high prices, and market purchase willingness was further suppressed. If copper futures keep fluctuating at high levels, spot premiums are expected to slide in the last few trading days in July.

Aluminium: Three-month LME aluminium closed 0.78% lower at $2,485/mt on Tuesday, with open interest increasing 3,728 lots to 669,000 lots, and is expected to trade between $2,470/mt-2,530/mt today.

The most-active SHFE 2109 aluminium contract decreased 1.22% to end at 19,385 yuan/mt last night, with open interest down 12,049 lots to 275,000 lots, and is expected to trade between 19,100-19,800 yuan/mt today.

The inventory decrease on Monday strongly supported aluminium prices. Attention needs to be paid to the progress of power curtailment, the floods in Henan, inventory inflexion points, and long-short sentiments.

Lead: Three-month LME lead ended 1.33% lower at $2,333.5/mt on Tuesday. US dollar fell for the third consecutive day on Monday, limiting the increase in LME metals. Whether the prices can reverse the losses back to $2,350/mt is worth attention today.

The most-active SHFE 2109 lead contract lost 0.41% to close at 15,935 yuan/mt in the overnight trading yesterday. Bulls further reduced positions to avoid risks, and the prices may fluctuate around 16,000 yuan/mt recently. Today’s focus will be the support of the 10-day moving average.

Zinc: Three-month LME zinc fell 1.3% to settle at $2,972/mt last night, with open interest increasing 806 lots to 250,000 lots. Zinc stocks across LME-listed warehouses dropped by 200 mt or 0.08% to 247,000 mt. US July Consumer Confidence rose to a 17-month high, and the house prices gained the largest year-on-year increase in May. Inflation worries increased, and the COVID-19 variant weighed on investor confidence. Attention needs to be paid to the results of the Fed meeting and Powell's speech. LME zinc is expected to fluctuate between $2,950-3,000/mt today.

The most-liquid SHFE 2109 zinc contract shed 1% to settle at 22,310 yuan/mt in overnight trading, with open interest down 810 lots to 103,000 lots. Long and short funds still had different outlook on the market. TCs for domestic concentrate rose again, and 50,000 mt of zinc reserve was released, keeping the supply abundant. Social inventories continued to fall to new lows, which boosted the confidence of the long funds. Zinc prices are expected to fluctuate at high levels in the short term. The September contract is expected to move between 22,000-22,500 yuan/mt today, and spot premiums for domestic 0# Shuangyan zinc will be seen at 160-170 yuan/mt against the August contract.

Tin: The most traded SHFE 2109 tin contract lost 1.86% to end at 229,600 yuan/mt last night.

Short funds were more hesitant after the prices broke down the support line, and stopped adding positions. Whether bears will increase positions today will be the focus. SHFE tin is expected to move under the pressure of 231,500 yuan/mt. The prices may fluctuate at high levels if breaking through the pressure line.

Nickel: The most active SHFE 2109 nickel contract increased 140 yuan/mt last night to end at 144,920 yuan/mt.

SMM comments
Copper
Aluminium
Lead
Zinc
Tin
Nickel

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